Pratt’s power play

Anthony Pratt, head of the $5 billion Visy Industries paper, packaging and recycling empire, has kept a relatively low profile since the death of his father Richard in 2009, but his next major initiative could change all that.

Pratt has unveiled plans to develop a series of $200 million waste-to-energy plant and waste transfer stations around Australia in what would be an Australian first.

The plans, outlined in The Australian, would see Visy establish so-called “pellet plants” in Brisbane and Sydney, where un-recyclable waste collected from transfer stations could be dehydrated into cork-sized pellets, which have the same “burn” power as low-grade coal.

Visy would also establish waste-to-energy plants, which would burn the pellets and create 75 megwatts of power which would be used to power Visy’s factories, with the excess power sold back into the electricity grid.

Visy’s first waste-to-energy plant is earmarked for Tumut in NSW (where the company has a big pulp and paper mill) and would cost $200 million. Anthony Pratt will also apply for $100 million from the Federal Government’s Australian Renewable Energy Agency to help set up its network.

Pratt, who has developed a smaller waste-to-energy plant operating in the United States and will open another in Victoria this weekend, says the grant would help bring the new Tumut plant to fruition by “a number of years”, although Visy will proceed regardless of whether it receives funding or not.

While the new Renewable Energy Agency is an independent statutory body, Visy has been briefing numerous politicians on the plan. The carrot for the Government will be Pratt’s promise that the Visy plan would create 3,000 jobs around the country.

Whether Pratt will get the taxpayer funds he seeks remains to be seen. No doubt there will be some concerns about giving taxpayer money to one of Australia’s richest families and there is also the issues that the power plant will create emissions of its own, although Visy argues they are much lower than coal.

But what is interesting here is the fact that Anthony Pratt is continuing his father’s push to use sustainability to vertically integrate the Visy empire.

Richard Pratt, who took control of the Visy empire in 1969, led the company into the recycling in the 1970s and 1980s and built the company’s global expansion on the back of this relatively new business area. Indeed, the company’s City of New York recycling contract won in 1995 was crucial to its success in the US.

Visy is proud of its heritage of sustainability, but the fact is that Pratt’s recycling strategy was designed to create new revenue streams for the business and allow it to control more of the supply chain.

“My grandfather started Visy as a box manufacturer back in 1948. My father integrated the company back into paper mills,” Anthony Pratt told The Australian.

“This is the next integration into what feeds the mills and that is energy. It’s part of the same supply chain and part of the next evolution.”

Anthony Pratt’s timing is smart. With landfill and electricity prices set to rise under the carbon tax, and the Government keen to support renewable energy, his chances of getting a grant have probably never been better.

But could this strategy lead to something bigger? Will the waste-to-energy vision lead to a new chapter in the Visy story – one written very much by Anthony Pratt?